X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
In the first of the closing arguments in the five-month trial of the two former top executives of Tyco International Ltd., the lawyer for former Chief Financial Officer Mark Swartz said yesterday the prosecution’s case was based on the “quantity” of its evidence, not the “quality.” “They threw a lot of charges against the wall, hoping some would stick,” said Charles Stillman of Stillman & Friedman. “It didn’t work. A 10-pound slab of clay is a 10-pound slab of clay.” Mr. Swartz and former Tyco Chief Executive Officer L. Dennis Kozlowski are charged by the Manhattan District Attorney’s Office with grand larceny, falsifying business records and several other counts for allegedly taking more than $170 million in unauthorized bonuses and loans. Manhattan Supreme Court Justice Michael Obus dismissed enterprise corruption charges against both men Friday. Passionate at times and aggressive throughout, Mr. Stillman yesterday sought to punch holes in the prosecution’s case by depicting Mr. Swartz’s actions as unremarkable and completely legal in the context of Tyco’s day-to-day operations. Mr. Stillman told the jury that Tyco executives’ compensation was certainly high but was in line with a corporate culture where “pay for performance” was the prevailing ethos. “There’s no dispute that Tyco was doing very well,” he said. In that context, Mr. Stillman said, it was ludicrous for the prosecution to contend that Mr. Swartz “stole” his compensation. In one instance, he said, both Mr. Kozlowski and Mr. Swartz had taken less than they were entitled to so other Tyco employees could also receive substantial bonuses. The defense lawyer also noted that the board granted Mr. Kozlowski considerable authority, and that Mr. Swartz relied on that authority in, for instance, authorizing a $20 million “investment banking fee” to former Tyco board member Frank Walsh in connection with Tyco’s 2001 acquisition of the CIT Group Inc. The disclosure of the payment to Mr. Walsh led to a 2002 internal investigation at Tyco and, subsequently, the resignations of both Messrs. Kozlowski and Swartz. Throughout the course of his day-long summation, Mr. Stillman addressed each of the major bonuses that Mr. Swartz received and reminding the jury that the executive had testified himself about meetings with board members at which compensation issues were discussed. Several board members have testified for the prosecution that they did not know about the two executives’ compensation, and none of the meetings Mr. Swartz testified about were memorialized. Mr. Stillman told the jury he anticipated the prosecution would make much of that fact in its summation. “The DA and the directors’ position is if it’s not recorded in the minutes, then it didn’t happen,” said Mr. Stillman. “That is not the evidence in this case and that is not the reality.” Mr. Swartz, who testified for more than a week, was the only defense witness after months of prosecution witnesses. Following his testimony, the prosecution called prominent litigator David Boies, whose firm Boies, Schiller & Flexner conducted the 2002 internal investigation, as its sole rebuttal witness. Yesterday, Mr. Stillman lashed out at Mr. Boies and said the prosecution’s decision to call him to rebut Mr. Swartz � rather than any of the Tyco directors or employees who had testified earlier � demonstrated the weakness of their case. “[Mr. Boies] came here in a futile effort to salvage what was left of a failed case,” said Mr. Stillman. The defense lawyer noted that Boies Schiller is representing Tyco in civil litigation against Messrs. Kozlowski and Swartz and has already earned more than $30 million for its work on behalf of the Bermuda-based conglomerate. He accused also Mr. Boies of ongoing cooperation with the prosecution. In a statement that drew an objection, Mr. Stillman said that calling Mr. Boies to testify was akin to calling one of the prosecutors. Mr. Stillman stressed several times that Mr. Swartz had made no effort to conceal his activities from board members, auditors, employees or “anyone else who might ask.” The executive’s actions did not show the requisite criminal intent for conviction, Mr. Stillman told the jury. Mr. Kozlowski’s team, led by Stephen Kaufman, is expected to begin its closing arguments today, with the prosecution to follow.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.